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Either we break the Eskom monopoly, or it breaks us – Helen Zille

Helen ZilleIf anyone still has any doubts about the severity of our electricity crisis, two recent articles should act as a final wake up call.

The first reported that Cabinet had been briefed by Eskom on the risk of a nationwide blackout. This is what happens when the grid fails and everything shuts down indefinitely. In other words, when load-shedding wasn’t enough to protect the grid from collapse. If this happens, we’d need to source a huge amount of electricity elsewhere to “re-start” the grid. This is not available from any of our neighbours.

To avoid this catastophe, it is inevitable that we will face heavy load-shedding for the foreseeable future.

In the second story, we read that the ANC had decided, at its annual lekgotla, to abandon the Independent System Market Operator (ISMO) bill. This is legislation that would have taken the management of our national power grid away from Eskom, allowing far greater involvement of Independent Power Producers (IPPs).

There is only one conclusion to be drawn here: keeping Eskom’s monopoly and control is more important to the ANC than solving this crisis.

Now, more than ever, we need courageous, selfless leadership. Instead, we have President Jacob Zuma. Between his attempts at laying the blame for the infrastructure neglect on apartheid and Gwede Mantashe’s preposterous assertion that our grid is strained because of “growth and development”, it’s hard to know whether to laugh or cry.

Never before has the notion of restoring Power to the People seemed more pertinent.

On Thursday 12 February, at 7pm, a packed National Assembly in Cape Town, and millions more watching on television, will listen to President Zuma’s State of the Nation Address (SONA). This is his opportunity to share with South Africa a frank and honest assessment of our current socio-economic situation, along with clear plans to tackle our biggest challenges.

However, having sat through all seven of his previous SONAs, I would be very surprised if this is what we get from him. Instead we will likely be regaled with several pages of “good news” factoids, cherry-picked from reams and reams of not-so-good-news. It will be little more than a state-sponsored PR exercise designed to make the ANC government, along with its provinces and municipalities, appear competent and caring.

A visitor to our shores with no prior knowledge of South Africa (more likely a visitor from Mars) might leave the National Assembly with a warm, fuzzy feeling, and an image of a country bravely overcoming its past and delivering opportunities for all our people to transform their lives.

But there will be no fooling those of us who live here. We know this is not the true state of our nation.

Ours is a nation where a third of the municipalities are, to use the official euphemism, in financial distress, and unable to deliver the bare minimum of basic services. Where half the children who enroll for Grade 1, don’t end up writing matric. Where connected cadres are deployed to high positions as a reward for their loyalty and not as a result of their competence. Where government corruption is endemic and vital state institutions have been “captured” by the ruling faction, in order to enrich themselves and be protected from the consequences. Where more than a third of the adult population is unemployed. Where our inability to get our economy out of first gear has seen our growth lagging far behind most of our continental neighbours.

This is the real state of our nation. But very little, if any of it, will make it into the text of President Zuma’s speech.

The biggest obstacle casting a shadow – quite literally – over our ability to grow our economy, to start and sustain businesses, to attract investment and ultimately, to create the job opportunities we need to include everyone in our economy, is our unstable electricity supply.

The damage to our economy, since load-shedding began in 2008, is estimated to be around R300 billion, and this number grows every day. If Eskom says we should brace for another five years of interrupted power supply, you can be sure that this is not a worst-case scenario. They mean at least five years.

There is no quick fix to this problem either. Power technologies have long lead times, and the problem is more complex than just the capacity to produce megawatts (generation). Our grid’s ability to move these megawatts from where they’re generated to transformers across the country (transmission) as well as our ability to then bring the power to end users in municipalities (distribution) is also compromised.

But that doesn’t mean we can’t make immediate changes. If President Zuma was serious about ending the electricity crisis soon, there are a number of steps he could announce right away to start turning the ship around. Next Thursday evening presents the perfect opportunity for him to do so, and we will all be holding our collective breath. The South African economy, having lost an estimated 1 000 000 jobs to load-shedding, is in desperate need of some key interventions.

The first step is to recognise that the biggest threat to a stable and steady supply of electricity in South Africa is Eskom. And by Eskom, I mean the stifling monopoly they enjoy (95% of our electricity supply comes from them), as well as the revolving door of unqualified cadres deployed to run this vital organisation.

Opening the grid, in a meaningful way, to independent power producers is key to solving our electricity generation shortfall. There is certainly no shortage of project proposals for co-generation, and with every round of bidding, the cost has come down.

These are typically projects that are quicker to establish, and many of them can come online within 18 months to two years. This is exactly what we need – not the gargantuan coal and nuclear projects that take decades and hundreds of billions of Rands to bring into service.

Connecting these projects to the grid is the next challenge, as many of them would be in remote locations. And, unfortunately, investment in the expansion of the grid is another area where Eskom has dropped the ball badly in the past two decades.

While I expect President Zuma to wax as lyrical as is possible to be when reading his speech about capital investment in infrastructure projects (his only apparent plan to spur growth and create jobs), it is worrying to learn that our infrastructure spending has halved from 2013 to 2014.

It is crucial that we invest in the expansion and maintenance of the grid so that we can tap into the massive potential for private electricity generation and connect these projects.

It is equally important that we take the management of the grid – the buying of electricity from producers and selling to distributors such as municipalities – out of the hands of Eskom. This is precisely what the canned ISMO bill would have done.

Apart from the fact that Eskom has proven woefully inadequate at handling our electricity transmission, it is not healthy at all for the same company that produces the bulk of the power, to also make decisions on transmission and grid expansion. We need competition, not a protected monopoly.

The second step is to re-look our ideal energy mix, taking the fast-changing energy landscape into account. And by this, I mean a far, far greater allocation to renewable energy sources.

In 2011 we drew up an Integrated Resource Plan (IRP). This is a long-term (20 year) framework that sets out our goals in terms of capacity as well as the ideal mix of electricity types. In drawing up this plan, it was stipulated that it should be reassessed and revised every two years.

It took three years for the first revision (2014), and this revision has subsequently been rejected. The result is that we’re now working off a plan that is completely outdated, in an energy landscape that has changed significantly in recent years.

When the original IRP was drawn up, renewable energy was still relatively expensive compared to coal and nuclear power. But since the start of the process to procure private investment in renewable energy projects (64 projects to date totaling R120bn), the price of wind power has dropped by 42%, and solar power by an incredible 68%. And the latest developments in biogas look even more promising.

In addition, the energy from the first wind and solar projects is estimated to have saved diesel and coal to the value of R3.7 billion.

But it’s not just the supply side that has changed. Demand has also dropped significantly from what was projected in the 2011 IRP, and we’re currently using less power than we did in 2007. (We can only imagine the icy grip that this has placed around any chances for sustained economic growth.)

And yet we’re still working off a plan that says renewables are too costly and we need massive nuclear builds to cope with projected demand.

This has to change. There are currently private sector bids for 6000MW of wind and solar power plants. This is almost a quarter more than the huge Medupi’s 4800MW capacity, but government is expected to authorise no more than a fifth of this. We’re talking energy that is entirely funded by the private sector and uses free fuel.

It is absolutely crucial that our IRP takes these factors into account.

Which brings me to the third step: we must abandon the R1 trillion nuclear deal.

Given our immediate need for power, the falling cost of renewables and the revised projection of our demand, it is sheer madness to persist with the nuclear procurement programme.

The only reason there could be for pursuing this project is the obvious opportunities for bribery and corruption on a mega “Arms Deal” scale so far unprecedented in South Africa. This is what these nuclear power stations are really about, because every rational analyst knows they are way too expensive and will take way too long, especially in a country where we have the abundant natural resources required to make renewable energy viable more quickly.

Government is yet to show us how this deal – reported to be worth as much as R1 trillion – will be financed, but you don’t have to be a financial genius to know that the user will pay. Electricity price hikes will be expected to cover a project of this scale, putting the final nail in our economy’s coffin and forcing future generations of South Africans to pay for it for decades to come. We simply have to walk away from it.

Government is also yet to explain how they will mitigate against a drop (or a smaller increase) in demand. Once we’ve committed to these reactors, we have to pay for them. And the less of their power we use (and the more energy individuals and factories generate from natural sources in their own homes and factories), the more costly nuclear stations become to run. We simply cannot end up paying off under-utilised nuclear power stations when we have so many other infrastructure investment priorities.

Of course there’s a fourth step too, and that is for the Eskom executive to return the absurd performance bonuses paid out to them. They must also be included in the public demand to #PayBackTheMoney.

Since load-shedding began in 2008, Eskom’s top brass has received a staggering R63 million in performance bonuses. In 2012 and 2013 alone, the nine members of the Eskom Board received R31 million in vested “performance shares”.

The salaries of the directors and group executives in 2014 amounted to R60 million (up from R57 million the previous year), of which R24.4 million went to its top three executives.

Former CEO, Brian Dames, received a whopping R22.8 million when he left, of which R5 million was simply for terminating his contract – all of this as the blackouts returned.

Everybody who hears about these huge amounts has the same question: Bonuses for doing what exactly?

If ever anyone failed to perform their duty, it is the Eskom executive. Their salaries and bonuses are an insult to every South African who has to cope daily with the effects of Eskom’s mismanagement.

I will be there, in the National Assembly, on the 12th of February. And I will listen very carefully to every word of the President’s speech.

With so much at stake, is bold leadership, for once, too much to ask?

Article by Helen Zille

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19 Comments

  1. Thabiso

     /  February 2, 2015

    Perhaps a national blackout could be scheduled around the exact time JZ starts blowing hot air in parliament, two week later the power is on and we never needed to hear any of the rubbish he spoke! Yay!

    Liked by 2 people

    Reply
  2. ian

     /  February 3, 2015

    Above all this, i am now lead to believe that the powers that be are insisting that all those in positions of authority at Eskom, are to be ANC members otherwise leave your positions.
    Is this the way that this ruling party believe that they can control this country. By ensuring that as an ANC member you will have to listen to what the government say and do. Sic, sic, sic.

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  3. Gerrit

     /  February 3, 2015

    Agree Helen. We need bold leadership that has the whole countrys interest at heart. If Business suffers everybody does.

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  4. Think about what would happen if there were a two week blackout. Without electricity there would be no water very quickly because the water needs to be pumped up to the reservoirs. The police would stop operating almost immediately without electricity so there would be rioting and widespread pillaging of the middle class areas. It would be a bloodbath in true African style. The entire economy would grind to a halt and, even if they got the grid up and running again, there would be no country left to use it.

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  5. Dr Guyon-Fry

     /  February 4, 2015

    I have just driven from a visit to what used to be called Qw-Qwa, and saw several large RDP housing developments – ALL of which had a solar panel in the roof. The most interesting thing, however, was that almost every little house had a DSTV satellite!!!!! This is a crowded area, with not many cars, but they can afford to use electricity for TV!!!!! Makes one think!!!

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    • Daan

       /  February 9, 2015

      I think you are mistaking those satelites for the new Open-View HD television. Free to watch. Soon there will be an “analogue switch-off” and then this will be the only means to watch E-TV and SABC. No more bunny-aerials.

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  6. M Myburgh

     /  February 5, 2015

    There’s no win in this situation whe facing now

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  7. Doug

     /  February 5, 2015

    The critics of the way South Africa is run are predominantly white and that is where the problem lies. It is Automatically perceived to be an issue of sour Grapes by the disenfranchised. Somehow it is imperative that the ALL of us realise that ALL of us are affected by Mismanagement. The Elected Government must take responsibility. This means listening and mulling over criticism and considering all advise that is in most instances is well meant. South Africa is a GREAT country and we owe it to ourselves and to our Children to make it work for all of us. The time is NOW and the future can be BRIGHT. Apartheid may have shaped us into what we were but there is NO EXCUSE for it to Define us in the Future as what we want to BE.

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  8. jenni mitten

     /  February 5, 2015

    Bold leadership coupled with intelligence and common sense is what we need but it’s NOT GOING TO COME FROM THE ANC.

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  9. Bernie Herbert Wilson

     /  February 5, 2015

    I like the idea of a nation wide black out, ons SADF Ou Manne, can get together and organize a black op during the black out, when the power comes back on we can have a free and fair election, where all corrupt individuals have disappeared down a deep hole, never to be found by Col. De Kock or anyone ever again!!! We’ll also take care of those who try become corrupt after this, that way taxes will go to the right place and the country will boomonce again.

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  10. Bernie Herbert Wilson

     /  February 5, 2015

    You know Doug, I am dumbstruck by your response, corrupt individuals don’t wake up and decide to be better. There is only one way to rid society of the cancer of corruption. your belief is like the ANC voting that there was no wrong doing by Zumampara in Nkandla… Their vote signified their united voice to ignore the truth, it did not change the truth. Truth remains true whether we accept it or not. Reject gravity and step of a building is what you are suggesting. The ANC is so evil (no surprises there as once a terrorist one can never become an ex terrorist, no matter how wrong apartheid was, Ghandi’s way was the right way), do you really believe any one of them is going to go “wow, I need to take responsibility”? The way they took responsibility with SARS when SARS started closing in. You are delusional. I have lived through Rhodesia and SWA, and TRUTH is that there is only one way they they will be responsible, or contribute anything positive to planet earth… WHEN THEY ARE ALL PUSHING UP DASIES!

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    • Doug

       /  February 5, 2015

      Oh Please Bernie ….And your Suggestion for a solution is….???? Calling people terrorists aint gonna help. Might make you feel better though. When I was in the BSAP in the peak off the Rhodesian Bush War I arrested someone for calling a Barman a terrorist in Bulawayo. Would you do that face to face Bernie or do you feel you have the protection of Social Media to further disenfranchise the disenfranchised. Simply put Bernie Are you helping or Hindering the situation by your Words. I’m here for keeps so I want to find a solution. Words are powerful tools my friend. So other than making you feel better about getting it off your chest… Are you HELPING or HINDERING the situation. I’m talking about all of us that perhaps feel there is a grain of chance of making things work for us and our Children….

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  11. Energy Fields can have the Acacia Power station working in under 18 months ,thats 171 Mw of additional power at peak times for the City of Cape Town derived from waste My website is http://www.energyfields.co.za take a look and see what it is that we can provide for the country.short term and long term solution.

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  12. Ursula

     /  February 6, 2015

    Dear Helen Zille,

    your article makes so much sense and allowing private companies to sell electricity has worked successfully in so many other countries. The 4 step plan presented in your letter all makes sense.

    I would love to read a 4 step plan of what we can do (we = not politicians but people living here working and bringing up our families) to help the situation. Social media is very powerful and I recently heard a story of a large company that had to change the ingredient of its product due to a child raising awareness over social media and having had so many followers to leave the giant company no other option than to comply. I heard this story in connection with the Davos summit.

    There must be a way out there to find a solution to Power in SA, based on positive thoughts rather than fear and blame.

    We all have a wish in common, from any political party, any color, rich or poor, we all want a good life, be able to cook food, watch tv, run our business, feel safe.

    What can we do to get there by 4 simple steps, easy, so all can understand, and then another step and another until we are there.

    Ursula

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  13. mia marsay

     /  February 6, 2015

    excellent article…thanks very much Helen Zille!

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  14. James

     /  February 9, 2015

    all true hellen but u are preaching to the converted the 50% that are not finishing school dont use facbook so find a diferent platform

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  15. mike

     /  February 12, 2015

    quite true – and disturbing to read. We all know very well the government is not going to suddenly turn around and do something really enlightening (if you’ll pardon the pun) by adopting bold plans to engage private power suppliers and invest in non- nuclear (more affordable) natural power sources- there are too many personally enriching vested interests involved. So we will move into grinding energy overheads that few will be truly able to afford and the mid-low class will continually accrue debt write-offs at the expense of the shrinking “affluent” (no longer so affluent) who also happen to be the tax base in this country. It’s amazing to me how one bunch of idiots never learn lessons from the other bunch of idiots who’ve already made the mistakes and destroyed their own countries. Typical politicians – they’re there for personal enrichment – not to serve the best interests of the people who put them there.

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  1. Zille: Either we break the Eskom monopoly, or it breaks usThe Green Business Guide

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